On the Tokyo Stock Exchange, Honda Motor Company stock closed at 2,907 per share on Monday, June
Question:
On the Tokyo Stock Exchange, Honda Motor Company stock closed at ¥2,907 per share on Monday, June 6, 2016. Honda trades as and ADR on the NYSE. One underlying Honda share equals one ADR. On June 6, 2016, the ¥/$ spot exchange rate was ¥107.57/$1.00.
a. At this exchange rate, what is the no-arbitrage U.S. dollar price of one ADR?
b. By comparison, Honda ADRs traded at $27.18. Do you think an arbitrage opportunity exists?
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a The noarbitrage ADR US dollar price is 2907 10757 2702 b It is ...View the full answer
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